Death by Information link dump

Ask and you shall receive. Well, sort of. After my first post on suboptimal internet use, I’ve noticed a number of other bloggers talking about that problem. At the bottom of this post, Chris Hayes talks about his internet use, and here’s Ezra Klein’s take. I assume more will follow. From Hayes’ post, I caught wind of two applications, Freedom and Anti-Social, that are a first rough hack at the sort of software I was calling for in my post (essentially, they lock you out of the internet or certain websites for a certain period of time that you set). But by far the most interesting piece I’ve read is by Paul Graham, about the addictiveness of the internet, which I think has implications beyond just the internet (and which I’m surprised isn’t discussed at all in the social sciences blogosphere). Money quote:

as the world becomes more addictive, the two senses in which one can live a normal life will be driven ever further apart. One sense of “normal” is statistically normal: what everyone else does. The other is the sense we mean when we talk about the normal operating range of a piece of machinery: what works best.

These two senses are already quite far apart. Already someone trying to live well would seem eccentrically abstemious in most of the US. That phenomenon is only going to become more pronounced. You can probably take it as a rule of thumb from now on that if people don’t think you’re weird, you’re living badly.

That last point, if true, is going to be a tough one to wrestle with, since we don’t yet really have a firm sense of what is living well or badly in the modern world, the way we do with say, alcohol consumption or other addictive vices.

Do markets understand politics?

[by JSC7]

Ezra Klein weighs in on Tyler Cowen weighing in on the Krugman/Rogoff debate about what debt-to-GDP ratio America can stand before growth starts to feel a drag. Klein says that maybe we shouldn’t be worrying about the specific number, but rather how well our political system can deal with the problem in general. Money quote:

But the driver behind that question is not how much debt we have, it’s whether our political system can make the difficult choices to deal with that debt. So long as the political system is working reasonably well, we can get out from even quite a lot of debt. But the more it breaks… the more it has reason to worry.

What I think is worth asking, if that’s the case, is how well our business world understands the political system. We talk a lot about how politicians don’t understand economics, but what if the reverse is true? Even assuming no change in the system itself, it’s a pretty opaque system to someone who isn’t involved in it (not relevant to the budget, but all the stuff coming out of the Top Secret America report can’t be an anomaly). But, of course, you have to factor in the political systems ability to change itself, especially in response to crises (like a ballooning deficit). I don’t know how many people on Wall Street have a good sense of this.

Especially when it comes to the budget deficit, you can see the possibility of a self-reinforcing feedback loop. Businesses think that government will respond reasonably to a large deficit, and so U.S. Treasury prices stay low, but because Treasury prices stay low, the government doesn’t feel an imperative to fix the problem, and maybe even continues to make it worse. If that’s a threat, then I’m glad we’re having debates about what debt-to-GDP levels are feasible, because it at least gives us a chance to point to a concrete number and say, okay, now we have a problem, rather than relying on markets to correctly predict politicians or vice-versa.

Nudging our way to freedom?

[by JSC7]

There’s been some debate in the blogosphere this last week about an article on nudging*. It’s in the Bill Easterly vein of saying, hey, nudging is cool and all but it’s no panacea, and sometimes you need to push. From an economics point of view, I find the topic fascinating, and worked on a few research projects that dealt with these sorts of nudging questions while at school. From a policy side, though, there’s always been something that bugged me about the nature of the debate, though I could never put a finger on what exactly that was, until I read Chris Blattman’s response to the aforementioned article. Key quote:

…if we really want to change a behavior, we have to change incentives (like prices) or impose restrictions. We don’t nudge people away from domestic violence, for instance, we criminalize it. We don’t just encourage people to stop smoking, we tax the socks off cigarettes.

The obvious rejoinder is that not everyone is comfortable with regulating and taxing and messing with prices. Nudging’s appeal is that it preserves free choice and minimizes state manipulation.

Italics mine. Blattman’s characterization of nudging’s appeal is 100% accurate, but I think the appeal itself is misguided. Worse, the nature of the appeal suggests that many of nudging’s advocate don’t understand the point of nudging.

The underlying thought behind nudging, and much of behavioral economics, is that mental costs are often as important as monetary ones. Classical economics assumes that the most important characteristic of a product is its price. Changing the price of gallon of milk by five cents will have much more impact than, say, where in the supermarket you put that milk (in fact, the latter is assumed to have no impact at all). Behavioral economics comes along and says, hang on a minute, let’s use cool experiments to prove otherwise. What we’ve concluded from these experiments is that non-monetary costs are not negligible. Okay, so rather than just having monetary costs in your equation for how much milk you buy, you now have to factor in both monetary and mental costs.

Is there some kind of fundamental difference between these two kinds of costs? As far as the economics is concerned, no. And yet, policy people seem to be enamored with the idea that raising the monetary costs of a transaction reduces free choice while raising the mental costs of a transaction does not. They’re turning a semantic difference into a normative one. The point of nudging is that we take advantage of the peculiar irrational wiring of our brains in order to unconsciously change our actions. The point is to circumvent our usual (suboptimal) decision-making apparatus. How does that retain free choice any more than a tax (if anything, I can see an argument for the reverse)?**

The idea that nudging ‘minimizes state manipulation’ also seems to stem from strange logic. I think people who think this are conflating the how much a particular state manipulation costs with how much is actually being manipulation. The nice thing about nudges is that there are certain tricks we can implement to get people to do particular things, and often these tricks are quite easy to implement. It may be cheaper to nudge than to pass a tax law, collect the tax, audit, enforce, etc.*** On the other hand, a consumer will probably see none of this. If you buy two packs of cigarettes a week with no intervention, and one pack a week with either a tax or some nudge in place, would the state be manipulating less if it implemented the nudge instead of the tax?  No, it would be the same manipulation, only more efficient. The state is still meddling in your consumption. Ron Paul should still be upset. It can just meddle on the cheap.

The big picture problem is that behavioral economics puts into question some traditional assumptions about human rationality, and offers some cool byproducts of doing so. Policy people snatch up those byproducts, but continue to hang onto dated ideas about human rationality, and thus can say with a straight face that nudging both actively changes people’s choices and gives them more freedom to choose at the same time. They should ask themselves, what is the value of a choice that we know, ex ante, we will not choose?

* If the word nudging means nothing to you, it’s an idea in behavioral economics that has made its way into pop public policy via this book. The gist is that there are certain problems we can solve by making small structural changes that seem trivial but actually matter a lot, like improving health by making unhealthy foods slightly harder to reach or increasing bank use among the poor by making forms easier to fill out.

** Interesting aside: with taxes, we have progressive and regressive taxes, the former taxing rich people proportional to their wealth, like the income tax, and the latter taxing everyone equally, and usually hurting the poor more, like a hike in subway fares. A nudge is like a mental tax (or subsidy, depending on which way it goes). Is it regressive if it disproportionately affects stupid people? What happens to people with non-standard thought patterns?

*** Although not necessarily. I’m sure there are plenty of nudges that would work but would be a pain to implement, like putting an actor posing as a hobo next to liquor stores.

What is an objective journalist?

[by JSC7]

As usual, unfashionably late to the party on the whole Dave Weigel “What happens on the mailing list stays in the mailing list” fiasco, but watching it play out has been a doozey. Here’s JSC5 bigger picture take, the Bernstein post he commented on, and some other reactions (1, 2, 3, 4). I don’t know, the whole thing seems to be one straw man after another. The one reasonable point that people have made is that reporters can have strong opinions about whatever topic they cover, though I feel like even there the analysis tended towards abstraction. Would we get up in arms if an environmental journalist sent a private e-mail talking smack about BP? Would we get angry about a correspondent in Burma told a buddy that he hoped the junta would set themselves on fire?

You can’t answer no to that question, yes to the Weigel equivalent, and still believe in the objectivity of news. If you answer the two questions differently, it’s probably because you think there’s something inherently worse about the Burmese junta than merits aggressive reporting from contrarian reporters, and that that something is lacking in conservative U.S. politics (Weigel’s beat). Now, that might be true, but if you think that reporting should change based on your opinions about the topic being reported on, then you’re not asking for objective news, because objective news would presumably have some standards that are independent from your personal tastes.

Which brings me to the bigger topic, which I haven’t seen mentioned in the Weigel case, which is how the hell do we measure objectivity in journalism in the first place? We can call a journalist voluminous, hardworking, concise and precise with his facts, but how do we go about calling him objective? In psychology there’s a word signaling, which means using something to signify something else (like, walking with a swagger to signal that your genes are the awesome). Weigel’s Journolist rant was taken as a signal of his lack of objectivity. Somehow, this rant managed to outweigh whatever signals of objectivity his entire opus of journalistic work was emitting.

This should be setting off red flashing alarms. I would hope that the Washington Post had some kind of opinion about Weigel’s objectivity before they saw the rant. If you called the in 2009 and asked them, hey, is Weigel an objective reporter?, they could have done more than shrug their shoulders. Somehow, though, a few lines about Matt Drudge’s self-immolation totally tipped the scales.

What this suggests to me is that it’s really hard to tell an objective journalist from a non-objective one. I haven’t heard anything more rigorous than a bells-and-whistles version of “I like to think I’m objective, and I like Weigel’s reporting.” If a show of hands is the best we’ve got, well, then we don’t got much, and whether Weigel should or should not have been fired is not the question we should be asking. Instead, we should be asking why ancillary factors like Journolist rants can totally change our evaluation of articles that have, without complaint about their objectivity, already been edited, published and consumed.

You say entertainment, I say information

I’m not sure where I’m going with that title, but whatever. I don’t think JSC5 and I disagree much in our two posts on the topic (here and here), at least not in terms of the definition of internet content. I agree that what I’m referring to as information is actually just entertainment in (an entirely see-through) disguise, though denial of that fact certainly contributes to the problem.

I guess where JSC5 and I disagree is how to deal with the problem that we both acknowledge exists. He, like a good American, is all for the pull yourself up by the bootstraps approach, and I think that’s fine, as long as it works. He uses the analogy of a bar, that a bar is entertaining, but none of us would focus all our social life at bars because we know that that wouldn’t be a good idea. I think the analogy works really well, but on a different level. The reason alcohol doesn’t monopolize our lives, as fun as it is, is because we have a strong social infrastructure that discourages it from doing so. Compare, JSC5, drinking culture in the U.S. to drinking culture in the Vietnamese business world, where those structures are weaker. Also, there’s the added fixed cost of having to go to a bar or otherwise procure alcohol, which at the very least means you need to be wearing a shirt, which already makes it different from most of time spent on the internet.

Right now, there’s very little cost to going online. Time and money costs are minimal, as most of us are never too far from an internet connection. And social costs, for now, are also minimal. We make fun of people who are glued to their Blackberries, but it’s worlds apart from how we view alcoholics. And so death by infotainment is very easy to reach, whereas death by cirrhosis is probably pretty rare. I still think that JSC5’s recommendation for diversifying entertainment stands, but I think that might take some willpower to implement. I know for me at least, software that let me forward commit to limitations would be a big help in implementing that diversification. Think about it like a forward commitment that didn’t allow you to drink during Vietnamese business lunches – tell me that wouldn’t have been nice?

And as for your recent guzzling of smart phone Kool-Aid, I say LEAVE! LEAVE BEFORE IT’S TOO LATE! BURN THE PHONE! No, but seriously, I have nothing against smart phones per se, other than that I think the social obsession with them is representative more of how much we are entertained by useless crap than by any value added. Obviously, this is not the fault of the machine itself, but how we use it. The alcohol analogy applies again; there’s nothing inherently wrong with the substance, just certain uses of it. Think of a smart phone as a the infotainment equivalent of a flask. A flask isn’t inherently bad – I’m sure there are plenty of occasions when I’ve thought, man, a spot of whiskey would really do the trick right now (as in, you know, every time I had to discuss something with el Doctor; apologies for the inside references, loyal readers). But generally, if someone has a flask, it’s not because they’ve adequately assessed their potential needs for portable alcohol, it’s usually because they’re the sketchy older guy taking his high school girl friend to a Dave Matthews concert and brooding in the background waiting for one of her hotter friends to ask if anyone brought liquor. Obviously, smart phones are handier than flasks, and, unlike flasks, will figure in prominent and useful ways in the development of human civilization. It’s just that those ways represent just a fraction of current smart phone use.

Death by information

The Web 2.0 age has always had its fair share of Luddites warning about the dangers of an expanding web. There have been Matrix-alluding pronouncements about the Intertubes taking over our life, social groups warning us about the demise of normal sexual relations stemming from porn that’s available faster than a cup of Ramen, and countless parents Twittering about how their kids are on their damn devices during dinner. I think most rational people tended to ignore these arguments, because apocalyptic pronouncements have probably followed every new major technology. Instant porn is here to stay; we figured we just have to get used to using in ways that are optimal. There is probably going to be a learning curve, but the only choice we have is to climb it.

Here’s what I think: whatever that curve is, we’ve proved really bad at climbing it. The anecdotal evidence is in cases like those SEC guys, high-up white collar professionals, who spent whole days downloading and burning to DVDs more pornography than they could ever consume. Increasingly though, there’s scientific research pointing to the same direction, like that discussed in this article about how being wired changes our brain. To be honest, the experiments themselves aren’t entirely convincing, and the conclusions verge on the extreme, but the basic premise is, I think, an interesting one. Basically, every time we see a new bit of information available for us, like a new e-mail or a new blog post on your favorite blog (no, really, you’re too kind), it gives us a little dopamine injection, an injection that we become accustomed to and learn to crave.

Here’s an experiment for you to do: wait until the most boring part of the day at work, like 4 pm (or 9 pm, if you’re in i-banking), and open your personal e-mail in a tab in your browser (if you don’t have it open already). Go to another tab, and go about your business. Wait for an e-mail come in, for the little (1) to appear in your Gmail tab (or, if you’re less organized, for the (564) to turn to (565)). Now see how long you can go without checking what that e-mail is. Can you go 10 minutes? 30 minutes? An hour? I usually give up after 15.

Here’s the problem with checking stuff out on the internet: it offers small, randomly placed rewards at almost no cost. When I’m bored, there’s a list of websites I’ll run through, even when I’m pretty sure there’s nothing interesting on them. Sometimes I refresh the stats page on this blog. If the number has increased, I get that small burst of dopamine (see how important you guys are?). How many of you can honestly say that you check Facebook the optimal number of times per day? If someone told you that you could only check Facebook one time a day, you might be annoyed, but would you really feel like you were getting less information than you wanted about what your friends were doing? To phrase it differently, do you feel like you’re not getting enough information today?

For me, at least, the answer is no. Assuming I’m not the only person with this answer, why are people so obsessed with smart phones and iPads? We’re breaking more and more ground in terms of being able to access information faster and from any location, and yet I don’t most people would say that they’re truly obtaining or using that information optimally. Unless you need it for work, you probably don’t need to be any more connected with the Web 2.0 world than you already are. If you’re anything like me, you probably want more structure rather than more quantity. And yet the only products we’re developing are ones that increase quantity.

I’m shocked that we haven’t come up with software that allows us to self-limit internet use. Right now, if you’re considering toning down your internet use, all you have is this Manichean choice between embracing your data-addiction and going cold turkey. In a world where people are having friends make up new passwords for their Facebook accounts so that they can’t access them anymore, is there no room for a simple bit of software that limits your ability to access to Facebook to certain specified hours? This software would be really easy to make, and yet, there’s nothing. Is anyone at Google reading this? Please?*

The basic idea of easily accessible information and social networking is great, but to make it really work it requires a level of organization and control that will take time to develop. Not to sound hokey or overly dramatic, but I bet someday we’ll look back at the current age of information gluttony like people today look back at the beginnings of the sexual revolution – a good idea that people got a little too excited about and ran off the rails. Now, if you’ll excuse me, I need to go Google my name.

If you’re interested in the economics of being unable to self-limit ourselves, check out this paper on how higher cigarette taxes lead to greater self-reported happiness among smokers.

Reform soccer’s rules

Richard Epstein over at Forbes offered up some interesting potential rule changes that might make soccer a better game. I like soccer. By far the best part of it is that there aren’t any commercials and you can do other things while you’re watching it, because everyone else in the room will start oohhing like a vuvuzela chorus as soon as something interesting will happen. And it’s the only competitive international team sport that anyone cares about. But I’m with Richard as far as changing the rules go. Today’s soccer rules are appropriate for 19th century high school games – they’re simple, easy to enforce with few refs and assume ties don’t matter much. For the World Cup, it doesn’t cut it. Here’s what I would add: Continue reading ‘Reform soccer’s rules’

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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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